Fuel Retailers Face New Financial Burden
Indian petrol pump dealers are warning they may cease accepting UPI payments for transactions exceeding ₹2,000 if a newly introduced flat ₹5 Merchant Discount Rate (MDR) is not waived. This move could force customers to pay in cash for larger fuel purchases, highlighting a growing dispute between payment processors and fuel retailers over operational costs.
The Contention Over UPI MDR
The National Payments Corporation of India (NPCI) recently implemented a flat ₹5 MDR for fuel purchases made via UPI that are above ₹2,000. While transactions below this threshold continue to incur zero MDR, dealers argue that even this "concessional rate" poses an unacceptable financial strain. According to NPCI, this charge is designed to protect petrol pump operators from potentially higher processing fees associated with large-value transactions.
Dealers Argue Narrow Margins and Fixed Pricing
Petroleum traders across the country, including those from Delhi-NCR, Punjab, Uttar Pradesh, Mumbai, Karnataka, and Rajasthan, have voiced strong opposition. Organizations such as the Federation of All India Petroleum Traders (FAIPT) and the Akhila Karnataka Federation of Petroleum Traders (AKFPT) have approached both central authorities and state-run oil marketing companies (OMCs) seeking a complete exemption.
Dealers emphasize that their profit margins, estimated at a slim ₹2.40 to ₹3.40 per litre, are already tightly controlled by OMCs. Unlike other retail businesses, fuel stations have no autonomy to adjust fuel prices to absorb additional operational costs. FAIPT spokesperson Monty Sehgal stated, "We may have to stop accepting UPI payments of ₹2,000 and above if exemption is not allowed to fuel retailers."
Significant Daily Impact on Operations
The financial implication of the new MDR is considerable for individual petrol pumps. Hemant Sirohi, a Uttar Pradesh-based dealer and member of the Empowering Petroleum Dealers Foundation (EPDF), highlighted the scale of the issue. Based on official UPI transaction data, approximately 20% of all fuel-related UPI payments nationwide exceed ₹2,000. This translates to an estimated financial burden of ₹230-250 per day for each petrol pump.
The All India Petroleum Dealers Association (AIPDA) has also formally requested the government for a full MDR exemption, pointing out that fuel purchases are inherently high-value, making transactions above the ₹2,000 threshold a routine occurrence at petrol stations.